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Halley v. Myatt

May 3, 2010


On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-2728-08.

Per curiam.


Argued March 23, 2010

Before Judges Parrillo, Lihotz and Ashrafi.

On leave granted, plaintiffs, Erwin and Lesley Halley, appeal the Law Division's dismissal of their legal malpractice action against defendant Rene Myatt, on grounds of lack of personal jurisdiction. We reverse.

Plaintiffs are New Jersey residents who owned four residential properties in the cities of Orange, East Orange, and Newark, which they purchased in 1999 with the intention of renovating and leasing them. In 2001, they moved into the residence on Ogden Street in Orange (Ogden Street residence) after completing substantial renovations. In 2003, however, plaintiffs encountered financial difficulties. As a result, they were unable to make mortgage payments to their lenders, American Business Mortgage Services, Inc. (ABMS), a corporation with offices in Roseland, and Southwest Capital Investments, L.L.C. (Southwest), another residential lender with offices in New York, which had acquired title from ABMS to three of plaintiffs' properties as a result of plaintiffs' earlier default in 2001.

When, in early 2003, foreclosure proceedings were commenced against plaintiffs' New Jersey properties, plaintiffs retained defendant, a New York attorney not licensed in New Jersey, to negotiate a remedy with their lenders to allow plaintiffs to retain one or more of their properties. Plaintiffs were referred to defendant through Al Sharpton's National Alliance Network's New York office. After contacting her by telephone, plaintiffs met with defendant in New York for an initial consultation, for which they were charged $250. At this session, plaintiffs brought all relevant documents. Although no retainer agreement was executed, defendant agreed to negotiate on plaintiffs' behalf in what she herself described as a "complex . . . legal matter." Defendant thereafter charged plaintiffs $250 per hour and was ultimately paid $2500 for her services.

Defendant commenced negotiations with ABMS and Southwest. Over the course of a year, defendant communicated regularly with plaintiffs and counsel for Southwest, all of whom were located in New Jersey. Correspondence and faxes were exchanged, all of which were directed to and from New Jersey. Various drafts of a proposed settlement agreement were also discussed and exchanged. There was also an in-person settlement meeting, although its time and location is disputed.

In any event, a final settlement agreement was executed on October 8, 2004. Defendant faxed the final version to plaintiffs, who signed it in New Jersey, and faxed it back to defendant, who in turn faxed the executed version to counsel for ABMS and counsel for Southwest in New Jersey.

Pursuant to the terms of the settlement agreement, deeds in lieu of foreclosure were executed by plaintiffs for the four properties to Tiger Relocation Company, which then recorded the deeds and transferred the properties to Southwest. All eviction proceedings related to the Ogden Street property were then dismissed and Southwest delivered a quitclaim deed to that property directly to plaintiffs, "free and clear of all liens by Southwest."

The settlement agreement also gave plaintiffs the option to purchase one of the two Newark properties (7th Street property) from Southwest for $105,000. Upon payment, Southwest would deliver a quitclaim deed to plaintiffs "free and clear of any liens against Southwest." ABMS was also to refund plaintiffs $7,153.20, and pay them $10,000 "[i]n complete satisfaction of any attorneys fees incurred by them in" the dispute. Soon after execution of the settlement agreement, plaintiffs exercised the option and re-purchased the 7th Street property. Defendant referred plaintiffs to New Jersey counsel to handle the closing, as she advised plaintiffs that she was not licensed to practice in New Jersey and, therefore, could not represent them at the closing.

Unbeknownst to plaintiffs, there was an existing $12,000 tax lien on the Ogden Street property, their primary residence, which allegedly had accumulated during the time Southwest held title to the property. In February 2005, the City of Orange filed a tax foreclosure action against the property. According to plaintiffs, they could not afford to pay the lien off. As a consequence, the lien grew to $47,694 by 2007, at which time plaintiffs filed a Chapter 13 bankruptcy to avoid a tax foreclosure of their home.

Plaintiffs filed the instant action against defendant*fn1 in the Law Division alleging legal malpractice for failing to conduct a reasonable title search, failing to inform plaintiffs of the ramifications of accepting a quitclaim deed as to outstanding liens and title defects, and negligently misrepresenting to plaintiffs their responsibility for any liens attached to the Ogden Street residence. Defendant answered and then moved to dismiss for lack of personal jurisdiction.

An evidentiary hearing was held, which focused on whether defendant was ever physically present in New Jersey during the course of her representation of plaintiffs. During the hearing, defendant's invoice to plaintiffs dated October 27, 2004, itemizing her services throughout the year, was admitted into evidence:

10/06/03: Review of Proposed Settlement Agreement; forwarded copy of Settlement Agreement to clients for their review; 2/24/04: Review of foreclosure papers on . . . Carnegie Avenue [East Orange property] delivered to clients; Further discussion with Attorneys and clients regarding Settlement Agreement; 5/10/04: Discussion with Attorney [for Southwest] regarding draft of Settlement Agreement; 5/26/04: Faxed my changes to Attorney [for Southwest] for his review; 7/02/04: Discussion with Attorney [for Southwest] regarding Clients desire to re-purchase 7th Street Property; Attorney [for Southwest] accepted offer of $105,000.00 for re-purchase on 7th Street; 8/24/04: Reviewed Proposed Power of Attorney for clients; 9/28/04: Discussions with Attorney [for Southwest] regarding adjourning the foreclosure sale; 10/05/04: Review of revised Settlement Agreement including the re-purchase of 7th Street; discussions with client regarding revisions; 10/08/04: Clients signed the Settlement Agreement; and executed Settlement faxed to Attorney [for Southwest] . . .; 10/12/04: ...

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